Avalanche is an open-source platform for launching decentralized finance (DeFi) applications and enterprise blockchain deployments in one interoperable, highly scalable ecosystem.
It launched in September 2020 as the first smart contracts platform that can confirm transactions instantly, support the entirety of the Ethereum development toolkit and enable millions of independent validators to participate as full block producers.
In addition to supporting sub-second finality, Avalanche is capable of throughput orders of magnitude greater than existing blockchain networks (4,500+ transactions/second), with safety thresholds well above the 51% standards of other networks. Its unique consensus protocol combines strong safety guarantees with rapid finality and high throughput, without compromising decentralization.
This high performance has empowered rapid growth on the platform. Since a bridge connecting Avalanche and Ethereum launched in early February, smart contract activity on the platform has boomed. In that time, smart contract transactions have increased by 1,279% to over 750,000, and unique wallets increased by 1,991% to top 45,000.
The Avalanche (AVAX) token is the native token of the Avalanche platform and is used to secure the network through staking, transact peer-to-peer, pay fees and provide a basic unit of account between the multiple subnetworks created on the Avalanche platform.
Ava Labs, the team behind the Avalanche platform, was co-founded by Cornell Professor Emin Gün Sirer, PhD candidate Kevin Sekniqi and Maofan “Ted” Yin, first author of the HotStuff Protocol used in Facebook’s Libra.
It has grown into a world-class team of experts in computer science, business, economics, finance, and law, with offices in New York City and Miami, and team members around the world. Avalanche is passionate about creating a frictionless world of financial services by redefining the way people build and use finance applications.
Over the 45-year history of distributed systems, there have only been three approaches to the consensus problem: Classical, Nakamoto and Avalanche.
In the wake of Nakamoto’s work, the world still wanted a protocol with all of the benefits of Nakamoto consensus (robustness, decentralization) and all the benefits of Classical consensus (speed, scale, quick finality, and energy efficiency).
Avalanche combines these properties into a new protocol that attacks scaling, security, and speed at the absolute foundation of decentralized networks. Avalanche consensus shows that you can have the best of both Classical and Nakamoto without the downsides that come with either class of protocol.
When a transaction is broadcast to the network, Avalanche validators undergo a process known as “repeated random subsampling” to independently poll other validators to determine if the transaction is valid.
Validators do this over and over again on new randomly selected nodes until there is sufficient data to determine that the transaction’s probability of being correct is so high it may as well be impossible for it to be wrong. With enough confidence, the transaction is finalized immediately in a process so fast that Avalanche rivals major payment systems in its ability to clear transactions in a network.
Avalanche innovates at every level of blockchain networks – foundationally, with a breakthrough in consensus protocols, and then continuing layer-by-layer, evolving areas like network and virtual machine models that haven’t been explored enough.
Unlike other networks that force terms and conditions of network participation uniformly across the system, Avalanche empowers individuals and enterprises to easily create powerful, reliable, and secure applications and custom blockchain networks with complex rulesets, or to build on existing private or public networks that fit their use case.
Take, for example, a regulated financial institution wanting to issue digital assets. In a system where the institution cannot control which nodes validate their network activity, it is not possible for them to do so compliantly. On Avalanche, the same institution can achieve complete control over the virtual machine running their use case and the conditions of running a node on their custom sub-network.
Avalanche employs a multi-chain framework with three blockchains that divide critical functions – and even employ different data structures – to give developers maximum flexibility and control over their applications.
First, there is the Exchange Chain (X-Chain). The X-Chain is optimized for the creation and exchange of assets between individuals peer-to-peer, including Avalanche’s native token, AVAX.
Second, there is the Contract Chain (C-Chain). The C-Chain is Avalanche’s default smart contract blockchain and a super-fast implementation of the Ethereum Virtual Machine. It is fully compatible with Solidity smart contracts and Ethereum tooling out of the box, so Ethereum developers can seamlessly port applications and assets into the Avalanche ecosystem.
Finally, there is the Platform Chain (P-Chain). The P-Chain is responsible for staking, coordinating validators across networks, and creating custom subnets. Every Avalanche validator participates in staking on the P-Chain to help secure the core network, but these validators can then form dynamic or private sets of validators to operate subnets.
On these subnets, the validators have complete control over the data, economic model, virtual machine, and more. A set of validators could hence port over virtual machines from any other blockchain network to effectively replace the underlying consensus mechanism and optimize those networks’ performance and smart contract logic.
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